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We make choices about energy every day. Some are small and others large, but collectively they affect where the U.S. economy and environment will be a quarter-century from now.
We may fit into the energy picture ourselves as customers, producers, sup pliers, or officials, but all of us help determine (directly or indirectly) the relative roles for energy sources such as coal, wind-turbines, and nuclear power in each given region. Attitudes toward energy efficiency count just as much, if not more.
As individuals, we may finally resolve to replace incandescent light bulbs at home with our own selections from among the numerous new “energy saver” varieties. Corporate boards may be asked to approve, postpone, or cancel projects that would commit vast resources for years into the future. In many ways, those disparate actions are similar—or at least can draw on similar principles.
Although energy has become a hot topic for discussion, surprisingly many decisions are made on the basis of habit, impulse, or incomplete information, with disappointingly little careful thought—sometimes even by professionals in the field.
A huge range of choices in regard to energy sources and energy applications touches private lives and livelihoods, whether or not we are in the energy business.
Shall I vote for that politician who promises that our country can be “energy independent”? Could I save money by trading in my car for a hybrid? Is Company X a good stock investment because (besides being on what I consider “the right side” in moving toward a “green” environment) its commercials about biofuels sound like the wave of the future? Thinking back to how a storm once left us without power for close to a week, would my business be better off if we installed our own generating equipment? If we do, what type should it be?
It doesn’t matter whether someone is choosing among ways to provide energy to others or deciding what kind, of energy and how much energy we ourselves will use. If we look more closely at the multitude of options most decisions face dilemmas on both the supply side and the demand side.
This guide does not propose ideal solutions for any of those dilemmas, because there are no sweeping, perfect answers. But there usually is a range of sensible responses—although even sincere, well-informed people will differ in their exact choices of action among them. The energy situation in this country and the world is dynamic, and it will stay that way.
If this were being written more than a few months ago, it would have been harder to resist including more specific examples of actual costs. Yet those numbers change so often and so violently (think about the quick run-up in 2008 oil prices to well beyond $100-a-barrel before backing off) that price comparisons among competing energy sources risk becoming anachronistic between the time a text is complete and the earliest it can be published. That’s why the successive sections stick to principles, which you should be able to apply for yourself Changes are inevitable in technology, social attitudes, government regulation, and geopolitics; a reader who comes to understand which of these will make a difference (and how much) can modify choices accordingly. After all, energy is still a commodity within our economy. Informed decisions are a personal matter in a basically free-enterprise environment.
A FREE MARKET’S RIGHT TO BE WRONG
One of several reasons why projections of our energy future have turned out so often to be wrong is that free will—for better or worse—plays a large role. The “invisible hand” of (free) energy markets doesn’t always produce what many economists would call rational behavior, although each separate input may be perfectly explicable. Another reason is that decisions about energy by individuals, corporations, organizations, and governments are often founded on their failure to comprehend adequately all the factors involved—ranging from fundamental realities to unintended consequences. The latter reason is something this guide hopes to help minimize.
Our overall attitudes toward energy are not dictated by a central authority, although executive leadership and legislative commitment are both essential for public policies to be effective. One thing that is certain, however, is that optimized responses that can achieve public consensus must to some extent include “all of the above,” from solar energy to nuclear reactors. This may seem like an inconvenient solution, and it will still be imperfect. It will also involve adjustments, but it is the path to the future that looks least rocky. and it is achievable.
GETTING OUR ARMS AROUND THE SUBECT
What is energy? It was only in the 1970s that we generally began to use that term as it is broadly used today, embracing many sources that are sometimes interchangeable. A search of publication directories such as the New York 7ime Index and Reader Guide to Periodical Literature issued before then shows entries referring to coal or oil or electricity or atomic power, but not often to energy in the more generic sense. The same is true of the word environment in the way most people now use it. Yet it would be out of the question at this point to write a guide like this about energy without devoting at least one section entirely to “environmental factors.”
Nowadays, people talk about energy all the time. Sometimes they even ask questions relating to energy; but not always to get information. Often these are merely rhetorical questions, for which nobody actually expects satisfying answers. For example, why don’t we have a national energy policy? When is the United States going to become “energy independent”? Where do the oil companies get off raising gasoline prices again? What can we do about global warming? Will we have enough natural gas to heat the house next winter? Why don’t we use more solar energy? Or shale oil? Or something like fuel cells?
This guide will supply answers to some of those questions directly. But it will also prompt you to ask more meaningful questions (and react thought fully to the answers you find or the ones you are offered). In the long run, this can help you shape energy policy yourself National energy policy is produced, after all, by bottom-up as well as top-down processes.
Each part of this guide builds on those that precede it, and it does so with a continuing underlying theme: Decisions about buying, selling, using, or investing in energy are invariably related to balance of one sort or another. Many of the numerous interrelationships are hard to figure out, but some are dangerous to ignore for too long.
Even if you happen to be something of an energy expert already, you may view energy issues in a new light after a few sections. On the other hand, if all you know about energy is what you read in the papers or hear on T this should help you spot many of the careless errors that even some good energy writers make every day. Along the way, you may win some bets with friends.
This first section involves some tough going, especially when it wades right into part of the “numbers business”—the many different ways in which energy is measured, here and abroad. Widely quoted statistics may be purposely or innocently misleading. Without some understanding of all this, discussions of energy dribble into meaningless comparisons of apples, oranges, and rutabagas.
Nobody expects anybody to memorize all the equivalencies among barrels of oil, kilowatt hours, and tons of coal. That’s what tables and calculators are for, although non-engineers in most cases will only need those occasionally.
They may be essential to double-check a feeling of suspicion about something one may have seen in the press. But anybody who thinks or talks about energy in broad terms should have at least a general impression of what a “megawatt” or “a trillion cubic feet of natural gas” means. This helps us sense whether claims about new energy developments should be taken as credible.
Some of these underlying concepts are keys to finding answers. ‘What this guide can't promise is that you will be pleased with all the answers.
SUPPLY, DEMAND, and VARIOUS KINDS OF BALANCE
Like any commodity; energy reacts to the forces of supply and demand. Their interaction is one of several sorts of balance this guide addresses. Energy prices are only one of the aspects of energy that may cause problems for individuals, economies, and societies; but it is fundamental to recognize that prices in a free market are determined by the balance between (1) what the whole chain of energy producers and sellers on the supply side are collectively willing to accept for delivering given amounts of energy in some form to customers and (2) what people who wish to consume energy are willing and able to pay for that amount at a given time, and in the form being offered (see ___ 1.1).
So far this seems simple, or at least as simple as any basic principle of economics can be made. But for energy there can also be complicating factors, even in a largely free market economy such as the United States. Many of those will be treated in Section 3. Each of the various sources of energy is also more multifaceted than a commodity like wheat or potatoes. There are factors on both the supply side and the demand side of energy that control the slopes of those two lines in the diagram, and that affects the point at which they intersect:
1. Energy may be supplied by different “primary” sources, such as coal, oil, gas, wind or water behind a dam. Both the nature and the relative costs of fuels or other energy sources vary more between one part of the country and another than most people realize. Consider coal: Texas burns lots of very-low-grade coal with so little potential energy per ton that it wouldn’t be worth shipping to most other parts of the country; Or consider gas: This country’s first gas utility was founded in Baltimore in the early part of the nineteenth century, and what it sold then was gaseous fuel produced synthetically from coal, pine tar, and other materials. Natural gas pumped directly from the ground is the cooking-and-heating fuel used there now, but it wasn’t generally available in the middle Atlantic states until after World War II. That’s when a wartime pipeline used originally to bring crude oil from the Gulf Coast to refineries along the Atlantic was converted to carry gas instead. The point is that some fuels don’t come close to competing in some regional markets at a given time, while supplies of those that do may be affected by many different and sometimes unrelated conditions. Drought may limit the ability of power-dams to function. A strike by miners or employees of a railroad may cut off coal deliveries to generating stations.
2. On the other side of the supply-and-demand balance, why do users want energy any way? They are interested mainly in what it does for them. Among other things it provides light, controls temperatures within buildings, propels automobiles, operates machinery or carries out chemical processes in industry. But not all sources and forms of energy are equally suited for such dissimilar tasks. Demand doesn’t apply evenly to all types of energy either, and the requirements of energy-users may change with the weather or with personal habits and overall economic conditions. Americans drive more during the summer, and that’s certainly when they use air conditioners most; so gasoline and electricity prices routinely change with the seasons. The price of natural gas rises during a cold winter, and temporary shortages may even develop then in some regions for this particular fuel. About 35 percent of the natural gas used in the United States goes into space heating within buildings.
3. As an additional complication, the various forms of energy—such as heat, motion, physical and chemical change, electricity and so on—can be converted into one another (see Fig 1.2). In fact, we sometimes find it convenient to switch back and forth between firms to accomplish our purposes. For example, burning pulverized coal to heat water can produce steam. In coal-fired power plants, the steam expanding from boilers spins the blades of turbo-generators to turn out about half of all U.S. electricity. Yet some of that electricity will be converted back into heat, boiling water once again so that a coffeemaker can transform ground-up beans into the flavorful brew you drink at Starbucks. This seems at first glance like a mindless circle, but think about it. My grandmother burned chunks of coal directly in a cast-iron stove to make her coffee in a big blue-and-white pot on top of it, but my wife would never think of mussing up her kitchen that way when all she has to do instead is flick an electric switch. Electricity is both a consumer and a source of useful energy It has many desirable characteristics, and convenience is one of the most important. It fits on both the supply side and the demand side in our energy picture. That’s important to the overall energy portrait!
4. Finally, various sources of energy can often be substituted for one another and there are many factors that determine whether or not they will be. Some of the turbine- generators that produce electricity are capable of using either oil or natural gas as their fuel. A “flex-fuel” automobile can switch back and forth between gasoline and a mixture of 15 percent gasoline and 85 percent ethanol. A home owner may decide to change from an electric range in the kitchen to one using gas. But, be sides being able to do the job at hand, any form of energy is evaluated by actual and potential end-users (and investors) according to multiple criteria—not just base price. More and more, for instance, Americans are becoming aware that the production and use of any energy resource affects the natural environment— although those effects differ from case to case in kind, extent, and gravity All this may seem confusing to keep in mind at once, even though we may have already known these facts or could have figured them out. However, there are three reasons for mentioning and emphasizing these interrelated basics right up front: (1) The supply-demand balance in energy is the final resultant of numerous subordinate factors, any of which can be determinative; (2) the United States has come for good reason to depend on a “diversified energy portfolio”—thus, for instance, enabling us to balance the ready avail ability of hydropower in one state with cheap and abundant coal in another; and (3) any attempt to “solve” our energy problems needs to weigh both sup ply and demand for all fuels, as well as the opportunities to make both the production and the consumption of energy more efficient. So we wind up balancing positive and negative attributes, according to a long wish list as we put together a composite national recipe of energy ingredients that changes over time—more about this shortly.
ALL THE SOURCES, PLUS EFFICIENCY
Efficiency should be more than a buzzword in discussions of energy; Efficiency is not an energy source, but it isn’t stretching too much to call it an energy resource. At times it is fair to treat it as an extra fuel option. Improved efficiency; on the supply side or the demand side, enables us to accomplish what we need and wish to do while suffering less risk of running short of the right amounts and kinds of energy to get those things done.
On the supply side, efficiency applies to the way fuels and energy are produced, stored, transformed, and delivered. On the demand side it includes of course the “efficiency ratings” of energy-using equipment such as cars, computers, and light bulbs; but it also involves the way in which energy is utilized. Avoiding unnecessary energy use by recycling some materials is only one of many possibilities. Others, which are often urged by electric utilities in their “demand side management” campaigns, include the regulation of thermo stats and the timing of some household chores that use lots of electricity to avoid periods of peak demand when less efficient generation units have to be pressed into service. Often—although not always—saving energy also helps to cut costs and reduce undesirable environmental effects. The rest of this guide will explain some of the subtleties in choices among energy sources and various efficiency options.
For reasons that should become increasingly clear in subsequent sections, the most troubling energy supply problem facing the United States today is not energy in general but oil. In 2007 we imported nearly two-thirds of the oil we consumed, and much of the oil supply in the world market comes from politically troubled countries whose total oil production and exports could plunge at almost any time. Simultaneously, “conventional oil” is hard-pressed to meet fast-growing demand in developing countries around the world. This is most notably obvious in populous China and India. Industry is booming in both countries, living standards are rising and the numbers of gasoline- or diesel-fueled motor vehicles are multiplying. The definition of conventional oil changes from time to time, and that will be addressed more specifically in Section 2.
Table 1.1 is worth looking at carefully. Saudi Arabia and Russia are the two largest oil producers, but they are even more important in the global oil market because they are also the two largest exporters. By contrast, the United States and China are significant oil producers, but their production each year falls far short of the amount they are consuming annually, so they must import. Furthermore, U.S. and Chinese “proved reserves” of oil (a term to be explained later) are dwarfed by those in several Middle Eastern countries.
TABLE 1.1: World’s Leading Oil Producers, with Related Data (global rankings in parentheses)
Production, exports and consumption are in millions of barrels per day for 2006; reserves are rounded to billions of barrels, as estimated by Oil and Gas Journal at the end of 2007.
U.S. dependence on imports of oil and refined petroleum products is substantial enough to cause concern, although statistics and recent trends have sometimes been exaggerated or misrepresented for effect. After a long series of almost uninterrupted increases, net imports have actually appeared to stabilize since 2004, despite continuing growth in population and economic output. Nevertheless, with gross imports representing about 65 percent of total U.S. petroleum consumption in both 2007 and 2008, maintaining overall adequate supply would rapidly pose problems if foreign sources were cut off and /or domestic production could not at least be maintained.
A U.S. shortfall of oil—or any other source of energy—might be alleviated in several ways: by increasing production, by reducing consumption, and /or by substituting other energy sources. Those who champion any single energy source exclusively as the sole answer to all of our problems, however, are part of the underlying problem. So are the cynics who spend all their time condemning one source or another. Those who think energy efficiency will take care of everything by itself are unrealistic. Almost any energy decision we make will involve some internal contradictions among the many results we would like it to achieve.
We in the United States need every significant source that exists. So do countries in the developing world, which will soon be consuming more energy jointly than the entire roster of nations that have already industrialized. For the stability of the global economy and the health of the planet, we also need greater efforts everywhere to improve the efficiency of energy production and energy consumption. All energy sources have pluses and minuses, and we individually assign different values to the various characteristics we wish to see in a “perfect” energy source.
___ 1.3 represents the situation graphically. Our energy goals interact like the arms of a dangling mobile, so that by emphasizing any one we affect the others. If we try to insist on absolutely secure supplies we will pay a price, often in dollars and cents, but just as possibly in the volume of that type of energy that is readily available to us. All energy sources involve some disturbances to our environment. If we forgo using much of what we have and wait for some future technology that promises to be more gentle but isn’t quite ready, we may have to accept a great deal of expense, discomfort, and inconvenience in the meantime. Time is a factor that is most often downplayed in energy discussions, but this guide will devote all of Section 6 to this.
It’s sometimes hard to tell in advance how arms of the mobile will react to each other, positively or negatively. This delicate balance is even more complicated than that between supply and demand. Also, it changes constantly, since we live in a global economy influenced by evolving technology and geopolitics.
Ideally, we want affordable energy…to be available in ample quantities…from reliable sources…that are safe and environmentally benign…when we want it!
The sum of all those good attributes is what we really mean by “energy security.” That, too, is a relative term.
Like the elements in ___ 1.3, all the sections of this guide interact. A reasonable place to start its explanations is with a picture of where U.S. energy comes from now, and what we do with it. This is depicted in ___ 1.4 as a “spaghetti chart”—the latest one available among those that have been produced by Lawrence Livermore Laboratory periodically since before the U.S. Department of Energy was established in 1978.
The chart is more user-friendly than it appears at first. It’s easy to see, for instance, that our major uses of primary energy (lined up on the left, from solar and nuclear through coal, biofuels, and oil) are:
1. to generate electricity, and
2. to supply transportation fuels for cars, freight, and aviation.
Electricity is an intermediate form of energy, converting various kinds of primary inputs into energy that has convenient end-uses in many different consuming sectors of the economy.
Technically, what is shown here is “commercial energy”. It does not include the energy supplied free by our sun that permits vegetation to grow and us to survive within a tolerable temperature range on Earth. It does display those relatively small amounts of solar and wind energy that enter our economy directly because we manage to concentrate their effects—at additional cost—in a way that substitutes for fuels.
As points are made throughout the guide, you will probably wish to look back at this chart repeatedly. In the long run, you’ll spot other informative features for yourself. You may also find it useful to glance again occasionally at ___s 1.2 and 1.3. They are reminders that most of our day-to-day interest in energy depends on what we want it to do for us.
The “spaghetti chart” makes it evident that more than half of all primary energy normally goes unused, that is, it is not being put to any end-use. Some loss is unavoidable, because no system exists for perfectly converting one form of energy (for example, heat or solar rays) into another that may be more convenient to use (such as electricity). But there are ways to boost conversion efficiency. Most of the improvements in vehicle mileage that have been introduced since the 1 970s have taken place through engine, tire, and body modifications; but it is clear that a great deal of the primary energy-input to autos is still wasted—regardless of what fuel is being utilized. Techniques for further improving efficiency in other end-use sectors range from replacing incandescent light bulbs with compact fluorescents to introducing “tri-gen” systems for large buildings. The latter can produce electricity, heating, and cooling while reducing the annual costs of all three. Footnote references will guide the reader to more information about these and other detailed aspects of energy that can’t be fully explored in a guide of this length, but the richest bibliography imaginable is available on the Internet through careful use of a good search engine. One goal of this guide is to help the reader-turned-browser sense when information on the computer screen is potentially useful and when to exercise caution or just dismiss it.
Take another look at ___ 1.4. Are there any surprises? Did you notice, for example, that oil is now a relatively insignificant fuel in generating electricity?
Before the “energy crisis” of the early 1970s petroleum rivaled natural gas and hydro in supplying the primary energy input to generate electricity, with each accounting for roughly one-sixth. That changed pretty quickly when concerns arose about the nation’s dependence on imported fuel, because the global market can be squeezed by political moves such as the Arab oil embargo (see Section 3). Electric utilities weaned themselves off oil, especially as new generating equipment was installed to satisfy this country’s continued growth In demand for electricity By the turn of the century the United States was using approximately twice as much electricity as it had in the early 1970s, but in 2007 petroleum’s proportional share in supplying it was only about one- tenth what it had been then. Currently, oil provides much less than 2 percent of the total primary energy input for the electricity sector.
Note that this chart compares quantities of various kinds of energy in “quads.” A quad is a very large unit of measurement that can be applied equally to the energy content of oil, gas, coal, nuclear fuel, or electricity. It is far easier at times to use a common unit such as this than to juggle tons of coal versus barrels of oil, cubic feet of gas, kilowatt hours, and so on. Measuring energy in this simplified way makes direct comparisons possible. It involves some conventional assumptions, but those details generally need not concern us. They do not affect the basic thread of this section or this guide.
Quad is shorthand for “one quadrillion British thermal units.” That is the equivalent of what is contained in the supply or consumption of about half a million barrels of oil each day for a whole year. A quadrillion, incidentally, is 10^15 -- or a “1” followed by fifteen zeroes. British thermal units themselves are abbreviated Btu, and Btu is another unit you should get used to seeing. Its own definition, however, is arbitrary and not especially helpful in visualizing much of anything: A Btu is the amount of heat-energy used to raise the temperature of one pound of water by 1°F under specified conditions.
Isn’t it ironic that the British have largely accepted the metric system while we in the erstwhile colonies stick pretty much to the hard-to-manage old English units? It might be easier if everybody in the world used a pure metric system, and there is one for energy content. It uses a very small unit called a joule and multiples thereof. The joule links directly to metric units of volume and weight, which simplifies the arithmetic. But the U.S. public decided resoundingly a long time ago not to switch to the metric system entirely, so we use a mixture of measurements. We generally think in terms of pounds rather than kilograms, cubic feet rather than cubic meters, and gallons rather than liters. Fortunately, an exajoule—which is 1 018 joules—is very close to the same amount of energy as a quad; exajoules are a large unit of energy that Europeans are more likely to use. My view is that when one is dealing with such large numbers it is almost unnecessary to distinguish between quads and exajoules when trying to make a general point. Those very large numbers may merely be estimates anyway, subject to revision when the yearly totals are cross-checked a Few months later. If you know that one exajoule is about the same as one quad, you will be as close as anybody in your carpool to understanding relationships at that level.
Measuring energy supplies and requirements in quads has become surprisingly common in general circulation newspapers and magazines, especially in North America. Above all, this provides a convenient way to compare large quantities of distinct sources of energy (such as oil, coal, or the electrical out put of a wind farm). But it is far less helpful when one gets down to cases of what sort of automobile to buy . . . or how much a new port facility that brings in cargoes of liquefied natural gas (LNG) from Trinidad and Tobago will mean in terms of heating homes in New England and thus how valuable it might be to a community Among other things, this calls for a table that converts various units of measurement into one another, like the multipage Table 1.2. Once again, however, it’s often sufficient to keep only rough equivalencies in mind. As already noted and in the table, for instance, a “quad” is about the same as half a million barrels of oil per day for a year. That’s close enough for most general discussions and comparisons.
MORE SPECIFIC DEFINITIONS ALSO MATTER
There is some justification for using a variety of measuring units in refer ring to specific energy sources, and that practice is not going to change. It seems reasonable to talk about coal in terms of tons and oil in terms of barrels. It is surely more graphic, and those are the units in which production levels and prices are most commonly expressed. When one talks about overall energy requirements, it can’t be emphasized too often that “tons of coal” or “barrels of oil” are not all homogeneous either. For instance, a typical ton of coal from deep-underground coal mines in the Eastern United States usually contains about 30 percent more Btus than most coal from India, no matter where or how each is burned. That makes the former far more valuable as an energy source. Most U.S. “deep coal” also has a higher energy content than an average ton of the “surface coal” that is excavated from open pits in states such as Wyoming, which produces about 40 percent of all U.S. coal. But coal from east of the Mississippi tends at the same time to contain more sulfur, and sulfur is an undesirable contaminant Burning any fuel loaded with sulfur releases air pollution unless it is removed somewhere along the line. Thus, besides taking into account the costs of shipping coal from mines to a point of use, the relative market price of “Eastern” and “Western” coal in the United States cranks in the expense of adapting electricity generating stations to strict regulatory limits on how much sulfur dioxide may be allowed to escape into the air as a plant operates.
Similarly, a barrel of West Texas Intermediate oil is worth more to most refiners than a barrel of the “heavy” crude that comes from most of Mexico’s oil fields, even though each is measured as 42 U.S. gallons. In the case of these two types of crude oil, the difference lies not only in the amount of sulfur and other contaminants each contains, but also in viscosity. The petroleum refining process (see Section 3 for more detail) separates crude into many different fractions that have different densities—weight per unit of volume. Such lighter fractions as gasoline and home heating oil are more valuable than the heavy gunk near “the bottom of the barrel”—which might be processed into fuel suitable primarily for ocean vessels, or possibly sold as asphalt for paving roads.
Of course, petroleum is no longer handled in barrels, and we may also need to remember that a U.S. gallon is about 20 percent smaller than an imperial gallon—the measurement used at filling stations in Canada and elsewhere. One way to eliminate that particular source of confusion would be to use the international convention of measuring quantities of petroleum in thousands or millions of tons, but this fails to take into account either density differences or variations in energy content among different kinds of crude oil and refined petroleum products. For that matter, a “ton” is normally defined in the United States as weighing 2,000 pounds, whereas global statistics for coal are more commonly given in metric tons—which are about 10 percent heavier. It simplifies matters if we stick to Btus and quads, or joules and exajoules, whenever we can.
Is it frustrating to have to think about all this? Sure! But, even after getting a grip on systems of measurement, one should also be wary of the many ways both energy advocates and energy critics misuse statistics to support highly questionable conclusions. Table 1.3 lists my “favorite” dozen.
Right at the top of the list is one that shows up clearly on the spaghetti chart a few pages back (___ 1.4). In 2006, the United States consumed close to 100 quads of “primary energy” as commonly calculated. That is, we more or less took that much energy out of circulation and tried to put it to work. Almost all of the primary energy came from nonrenewable sources such as coal and oil, so we might say that for practical purposes planet Earth’s supply of roughly this much fuel energy vanished forever. Yet less than half of that primary energy (about 43 percent) really wound up being put to end-uses such as operating machinery, hauling freight and passengers, or maintaining a comfortable temperature inside buildings. The rest was unused, or “rejected,” as shown on the right side of the chart.
TABLE 1.3: A Dozen Ways to Confuse People with Energy Statistics
1 Mix up “end-use energy’ with “primary energy”
2 Cite “generating capacity” as if it were the same as “electricity supply”
3 Exaggerate or minimize the significance of change by choosing certain time periods or playing with percentages
4 Ignore the time value of money and such items as opportunity cost
5 Pretend that all “resources” will some day be “proved reserves”
6 Don’t bother with “life cycle costs”
7 Forget about “transaction costs” (including transportation expense)
8 Be selective in taking account of “externalities”
9 Overlook offbeat categories such as “nonenergy use” and “natural gas liquids”
10 Aggregate or disaggregate statistics (whichever supports your argument)
11 Be vague about definitions
12 Hide your underlying “assumptions”
Energy statistics are easy to mix up unless we differentiate clearly between “primary energy” and “end-use energy.” For the purpose of public understanding, it doesn’t matter whether this is done innocently or consciously. The residential and commercial sectors are sometimes lumped together in statistical presentations such as this because they both take place largely within similar types of buildings. However, that makes energy consumption in the combination of the two appear to be less significant than in either the industrial sector or the transportation sector. That’s true for “end-use” energy; but not necessarily for primary energy; Both residential and commercial energy use involves a great deal of electricity; and it takes a lot of primary energy to generate electricity; There are also “line losses,” largely in the form of heat, during delivery of electricity along transmission and distribution wires. Thus, the distinction between primary and end-use energy can be important when we look for policies and practices that will help balance supply and demand over time in a way that keeps the goals of availability, reliability; affordability; and environmental acceptability all in mind.
A very large portion of the primary energy we consume is rejected as “waste heat” in the conversion process of generating electricity, and Section 2 explores some ways this loss of energy can be reduced. Another big chunk disappears in much the same way during industrial operations. Many people are surprised to learn how much of the primary energy that is expended in transportation also goes for no direct useful purpose. Fairly large energy losses in driving a car or truck come via the tailpipe in the form of environmental pollutants such as unburned or only partly combusted fuel, through the friction of internal moving parts as well as tires on the road surface, and via engine heat.
Other sections will refer to other of these “easy ways to confuse statistics” in appropriate contexts, but—in addition to distinguishing between primary and end-use energy—one more is so fundamental that it needs to be addressed here. That is the common practice of mixing up “electricity generating capacity” with “generation output.” The first term usually refers to the maximum amount of electricity that a generating unit such as a wind turbine can deliver at any given moment in time, and you might compare it to the top speed of an automobile. It can be measured in watts, kilowatts, or any other multiple of those metric units of measurement. (The metric prefixes are given in Table 1.2.) By contrast, “generation output” is used to indicate how much electricity the unit really delivers over a substantial given period of time—say, a year. This is comparable to the distance an auto actually travels, thus providing useful transportation. It is the number related to total energy supply.
Notice that not all the blades of the wind turbines in various images of wind farms are turning, because variations in air movement are often highly localized. The average wind speed at a site that is carefully chosen for a wind farm should be fairly brisk and steady overall, yet a group of wind generators can be counted on typically to produce only something like 35 percent of their combined capacity. Electricity is very difficult to store, however; and during periods when demand for electricity is at or near its peak wind farms supply as little as 10 percent and usually no more than 20 percent of their rated capacity;’
Electricity output delivered to an individual home or business is usually measured on a utility bill in kilowatt-hours, and for broader comparisons it is more commonly reported in successively larger metric units—each 1,000 times the smaller one. Thus, the supply of electricity for a large region is customarily expressed in megawatt-hours or gigawatt-hours. The average residential customer’s household consumes approximately 920 kilowatt hours per month on a year-round basis; but this number fluctuates seasonally; thus, some utilities face demand peaks in summer while others are “winter peakers.” It generally depends on whether air conditioning or electrical-resistance heating predominates.
Don’t be embarrassed if it takes a while to get a feel for the significance of various metric units as used in energy systems:
• An electric kilowatt is the same as 1,000 watts. Think of the power needed to switch on ten 100-watt light bulbs—or a single electric hair dryer—for an instant.
• A megawatt equals 1,000 kilowatts, or 1 million watts.
• A gigawatt is 1000 times that big, and a terawatts equivalent to 1,000 gigawatts. The generating capacity in the entire United States in 2007 was about 1,000 gigawatts (1 terawatt), and there are 8,760 hours in a year, yet all the units together produced only about 4,000 tera watt hours of electric power during 2007. That was less than half of hill capacity; so obviously they weren’t all going full-blast all the time. They can’t, for a variety of reasons that this guide will help explain. The important thing to remember is the difference between a kilowatt (kW) and a kilowatt hour (kWh). Each is important, but for different reasons.
Why would anybody fudge the difference? It happens often when people are touting a source of generation that for practical purposes operates only intermittently. Some old fossil-fueled plants are so inefficient that they are called on to perform only when supply is so scarce that it is deemed all right to accept their extra operating expense or pollution burden. Although it’s true that even efficient, directional wind turbines produce electricity that is equivalent to only about one-third of their rated capacity at best, they can still fill useful niches in our national energy portfolio. On the other hand, some types of generation are especially adapted to almost full-time operation. These are called base-load plants. They are complemented by intermediate systems that can be turned on and throttled up and down quickly. Some hydro installations are especially valuable for such assignments. The aptly named peaking units complete the roster. They are called on as available to satisfy peak demand.
The prototype of a large baseload unit is a nuclear power plant. The ones in the United States now typically operate at more than 95 percent capacity; which means they operate economically 24 hours a day, seven days a week, for months at a stretch. Does that mean that nuclear power is the answer to all our worries about reliable and adequate supplies of energy? Sorry! More than 100 U.S. reactors now supply commercial power; but no new ones have been added for decades, and any new ones ordered by 2010 will probably not be ready for half a dozen years or more to supply electricity; Even with improved designs and more streamlined regulation, advanced nuclear plants take at least several times as long as most other types of generating systems to plan and build, and the timeliness of an energy solution is one of its basic criteria. It is one of the arms of the policy mobile. “Nukes” are also capital- intensive. Their heavy initial costs can be balanced by relatively low operating costs, so they can produce decent returns—but only over decades of operation. and there are still public concerns about safety and ultimate nuclear waste disposal. These are perhaps overblown, but they are still troublesome. Keep in mind that consensus, as difficult as it may be to achieve, is needed in order to move in any direction with energy at any level.
We can’t afford to give up in despair. We just need to recognize that legitimate policy goals interact, and that there is no single answer. This applies not only to electricity but across the board. It is true for energy uses in homes, businesses, transportation, and industry.
Even the most appealing programs of energy efficiency will probably see our country increasing its appetite for energy, thanks to a growing population and a traditionally vibrant economy with rising living standards. A national “budget” of roughly 100 quads of energy consumption might easily grow to 120 or more by 2025 without strenuous national and individual efforts that might come in the quest for energy security, reliability, or protection against the possible problems of climate change. It’s safest to project that we will need all of the energy inputs alluded to above. Those who control capital resources must decide when, where and how to invest in the future, and prudence insists that they consider multiple factors simultaneously.